Minority Shareholder Right To A Director Clause

This Minority Shareholder Right to a Director Clause is for use in a Shareholders’ Agreement where one of the investors is a minority shareholder and would be unable to ensure that they stay involved in the management of the company through the exercise of their own voting rights alone.

What this clause is designed to achieve

The clause creates a legally enforceable right for a minority shareholder to hold a position on the board of the company, which would otherwise not exist.

Without such a clause, a minority shareholder is vulnerable to being squeezed out of the management of the company by the other shareholder(s).

How the protection works in the Shareholders’ Agreement

The other shareholders give an undertaking to use their voting powers to ensure that the minority shareholder director is appointed to the board.

The shareholders also undertake to remove any director who votes against the appointment or reappointment of the minority shareholder director, and to suspend that director for a specified minimum period.

Optional delegation to a third party

The clause includes an option for the minority shareholder to delegate their right to be a director to a third party, who will have exactly the same protection.

Where this clause is already included

This Minority Shareholder Right to a Director Clause is already included in the following documents:

• Shareholder Agreement - Long - New Share Issue - Minority Shareholder Bias
• Shareholder Agreement - Long - No Share Issue - Minority Shareholder Bias

Minority Shareholder Right To A Director Clause is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.